Singapore’s MAS Drives Forward Commercialization of Asset Tokenization

Highlights:

• MAS enhances tokenization with new measures for liquidity, infrastructure, and settlements.
• Project Guardian expands frameworks, boosting industry-wide implementation of tokenized assets.
• MAS launches GFTN to boost Singapore’s role in global fintech.

Singapore’s Monetary Authority (MAS) has announced new measures designed to support tokenization in financial services. The aim is to increase the tokenized asset liquidity and enrich the market infrastructure ecosystem. In addition, MAS will establish industry frameworks for the implementation of tokenized assets. It will also enable the access of common settlement facilities for these assets.

Singapore’s Monetary Authority (#MAS) today announced new plans to advance financial services #tokenization. This comprehensive initiative aims to develop a robust commercial network, bolster the liquidity of tokenized assets, and establish a cohesive infrastructure ecosystem.… pic.twitter.com/Bb9vTHWris

— Dehua (@DehuaFi) November 4, 2024

Project Guardian Frameworks Expand

Project Guardian has over 40 financial institutions, industry associations, and policymakers. The Project is the crypto industry group of MAS. It spans seven jurisdictions and seeks to bring tokenized assets on a large scale. In addition, the Project has conducted over 15 trials in six currencies. 

This initiative involves financial institutions such as Citi, HSBC, Schroders, Standard Chartered, and UOB. To commercialize asset tokenization trials, they have formed the Guardian Wholesale Network. This collaboration is expected to improve capital raising, secondary trading, and settlement processes.

GL1 Supports Cross-Border Transactions

In 2023, MAS launched the Global Layer One (GL1) initiative to build foundational digital infrastructures. The infrastructure supports commercial networks for seamless cross-border tokenized asset transactions. This initiative is led by a core group of global banks, including BNY, Citi, J.P. Morgan, MUFG, and Societe Generale-FORGE. It focuses on governance, risk management controls, and settlement arrangements.

GL1 will expand its role to develop compatible market infrastructures. By doing so, this will make trading of tokenized assets across borders easier. It will involve the development of control principles, alignment of roles and responsibilities, and improvements to financial stability. 

Interoperability between different systems will also be addressed by GL1. The first aim of the group is to create templates with built-in compliance checks, so the onboarding of new participants can be quicker.

MAS Common Settlement Facility Updates

Common settlement assets, according to MAS, are important. They are regulated forms of tokenized money used to execute transactions. They help mitigate settlement risk and market fragmentation. MAS will facilitate financial institutions’ access to these common settlement assets. It includes testing S$ wholesale central bank digital currency (CBDC).

The SGD testnet will have key features available in the initial test network. This covers the issuance, transfer, and redemption of the S$ wholesale CBDC. Purpose Bound Money allows for Programmable transactions with conditional triggers in the network.

It also guarantees interoperability with existing market infrastructures. The test network will involve banks such as DBS, OCBC, Standard Chartered, and UOB. It will be used for payments and securities settlement.

MAS Deputy Managing Director Leong Sing Chiong noted that there is a strong interest in asset tokenization. He mentioned great participation from financial institutions and policymakers. The idea is to develop industry standards, with a focus on scaling tokenized markets across different sectors.

Global Finance and Technology Network Initiative

MAS is also launching a new initiative called the Global Finance and Technology Network (GFTN). The move follows three years of operating Elevandi, a non-profit set up to foster the growth of fintech. GFTN is expected to help Singapore cement its position as a global fintech hub.

The Monetary Authority of Singapore (MAS) will establish the Global Finance & Technology Network (GFTN), replacing its current not-for-profit FinTech initiative, Elevandi.https://t.co/NjNtTqnx8m

— Insurance Business (@IB_Asia) November 2, 2024

The new network will replace Elevandi and build on its achievements. Elevandi played a major role in organizing the Singapore FinTech Festival, now in its ninth edition. The event is internationally renowned as a leader in financial innovation. This legacy will continue with GFTN, focusing on collaboration between the public and private sectors. It aims to help drive progress in the digital economy.